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| | | | | | | | | | | | | | Share Price: | MYR1.54 | Target Price: | MYR1.55 | Recommendation: | Hold | | |
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| | | Acquires more i-Park assets | | We are mildly positive on Axis' proposed acquisition of two industrial properties in Johor. We estimate the purchases to be EPU/DPU accretive with an estimated 6.8% blended net property yield. We nudge up our FY18-20 earnings forecasts by 0.2%-1% p.a. and consequently raise our DDM-TP by 5sen to MYR1.55 (cost of equity: 7.9%). | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 171.3 | 172.7 | 201.8 | 225.1 | Net property income | 144.3 | 146.2 | 173.4 | 194.5 | Distributable income | 90.2 | 90.8 | 111.2 | 127.5 | DPU (sen) | 7.4 | 7.4 | 8.1 | 9.3 | DPU growth (%) | (1.8) | 0.1 | 9.1 | 14.6 | Price/DPU(x) | 20.7 | 20.7 | 19.0 | 16.6 | P/BV (x) | 1.2 | 1.2 | 1.2 | 1.2 | DPU yield (%) | 4.8 | 4.8 | 5.3 | 6.0 | ROAE (%) | 8.9 | 8.2 | 7.0 | 8.0 | ROAA (%) | 4.1 | 3.8 | 4.2 | 4.6 | Debt/Assets (x) | 0.3 | 0.3 | 0.4 | 0.4 |
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| | SECTOR RESEARCH | | | | | | Expect muted 2H18 outlook
by Chee Ting Ong |
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| | | | | | The recent high fossil fuel price has provided a good floor price to CPO. That said, CPO spot price YTD has been lower than expected. We cut our 2018-20F ASP forecasts to MYR2,450/2,550/2,600/t amidst ample CPO supply. We maintain our 12M NEUTRAL view on the sector and continue to prefer growth and undervalued stocks. Our BUYs are FR, GENP, BAL and SOP. We downgrade IOI to HOLD (from BUY) given lack of catalyst after the payment of a special dividend post Loders disposal. | |
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| | MACRO RESEARCH | | | | | | Reserves record first monthly drop since Dec16
by Suhaimi Ilias |
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| | | | | | External reserves fell by -USD0.9b to USD108.5b in May 2018 from USD109.5b in Apr 2018 amid foreign selloffs in local equity and bond markets following increased risk aversion towards Emerging Markets as well as domestic political developments and policy implications in the aftermath of the 14th general election that resulted in the change in government. The latest tally is equivalent to 7.6 months of retained imports and 1.1 times of short-term external debt. | |
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| | | | | | Dow Jones Industrials Average Index: The Worst is Over
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI rose 8.68pts to 1,785.81 yesterday, but off its intraday high of 1,801.42 as profit taking activities accelerated in the afternoon session. Advancers were led by TM, MAYBANK and RHBBANK. Broader market continued to be in a frenzy mood with gainers outpacing losers by 597 to 357. A total of 4.06b shares worth MYR3.25b changed hands. Market could stage a pullback after three straight days of gains. Investors may also turn risk-off ahead of G-7 meeting for clues on trade outlook. | |
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| | | | | | Outflows amid Policy Uncertainty
by Winson Phoon |
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| | | | | | Foreign funds withdrew MYR12.9b from local bonds in May, the largest since Mar 2017, likely due to positions trimming associated with the Election and exaggerated by a risk-off tone in emerging markets. The relative calm in Ringgit suggests that stabilisation measure may be at play. For EM Asia debts, foreign net sell amounted to USD4.5b (Apr: -USD4.8b), according on the IIF, with outflows from Indonesia and India. | |
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| NEWS | | | Outside Malaysia:
U.S: Consumer credit posts smallest gain in seven months. U.S. consumer debt outstanding rose in April by the least in seven months, reflecting a slowdown in non- revolving credit, Federal Reserve figures showed. Total credit increased USD9.3b m/m after an upwardly revised USD12.3b gain. Non-revolving debt outstanding grew USD7b m/m after a USD13.4b increase. Revolving credit outstanding climbed USD2.3b m/m, the most this year, after a USD1.1b decline in March. (Source: Bloomberg)
E.U: Euro-area exports fell for the first time in five years at the start of 2018, dragging on economic growth, which slowed sharply in the period. Updated first-quarter GDP data showed that government spending stagnated in the three months through March, while exports fell 0.4% and net trade proved a drag. The economy expanded 0.4%, down from 0.7% at the end of 2017, in line with the initial reading from the Eurostat office. (Source: Bloomberg)
U.K: House-price growth continued to slow last month, providing further evidence of a weakening property market. Prices were 1.9% higher on the three months to May on an annual basis, down from 2.2% in the period through April, mortgage lender Halifax said. On the month, prices rose 1.5%, reversing a decline in April of more than 3%. British housing prices have been weakening for years after a three-decade boom. Lower demand because of Brexit, slower economic growth and stretched valuations will probably continue to weigh on the market. (Source: Bloomberg)
China: Foreign currency holdings decreased for a second month as a weaker yuan impacted the valuation of the dollar-denominated pile. Reserves fell USD14.23b to USD3.111t last month, the People's Bank of China said. China's stockpile, the world's largest, has been more volatile this year after registering a full-year increase in 2017. As China slashes tariffs to encourage imports and likely opens the economy further amid trade tensions, the holdings could fluctuate more frequently. (Source: Bloomberg)
Brazil: Real is in free fall as traders look to Central Bank. Brazil's real is proving immune to intervention from the central bank this week, adding pressure on policy makers to find new ways to support the currency. The real, already the worst performer among peers this quarter, tumbled as much as 2.4% in a third day of sharp declines even after policy makers sold an additional USD2b of foreign-exchange swap contracts, marking the second time this week it's gone beyond its usual daily offer of USD750m. (Source: Bloomberg) | |
| | | | | Other News:
Straits Inter Logistics: To buy 55% stake in oil bunkering services firm for MYR36m. The group is acquiring a 55% stake in Tumpuan Megah Development S/B, which has similar core business activities as Straits, for MYR35.75m. Straits said the acquisition will be satisfied via a combination of MYR7.8m in cash and MYR27.95m via an issuance of 116.46m new shares at an issue price of 24sen per share. (Source: The Edge Financial Daily)
TM: Sets up new Dubai unit to focus on sales in Gulf states. The group has established a wholly-owned subsidiary in Dubai to focus on regional sales in the Gulf nations of United Arab Emirates, Qatar, Bahrain, Kuwait and Oman. Registered as Telekom Malaysia DMCC, TM said the new subsidiary is based in the Dubai Multi Commodities Centre (DMCC), a free trade zone. TM, which provides fixed line services, said Telekom Malaysia DMCC has an issued capital of AED50,000 dirhams (MYR54,100). (Source: The Edge Financial Daily)
HSS Engineers: Lost MYR290m job after MRT 3 project cancelled. HSS Engineers says its contract as the independent consultant engineer for the Mass Rapid Transit Line 3 (MRT 3) had been terminated by Mass Rapid Transit Corp S/B. The termination notice came following the Government's decision not to proceed with the project, the company said in a filing with Bursa Malaysia today. HSS Engineers was awarded the contract, valued at MYR289.9m on April 12. (Source: The Star) | |
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